When your mortgage term ends, most Canadians do exactly what their bank expects: accept the renewal offer mailed to them, sign it, and move on. That’s understandable — renewal paperwork arrives at a busy time, the numbers look familiar, and switching seems complicated.

But “familiar” and “best” are not the same thing. Understanding what actually happens at renewal can be worth thousands of dollars.

The difference between a term and an amortization

This confusion trips up a lot of homeowners. Your amortization is the total life of your mortgage — typically 25 years. Your term is the chunk you agree to repay at a specific interest rate — typically 1 to 5 years.

When your term ends, you haven’t paid off your house. You’ve simply reached a checkpoint where your rate and contract need to be renegotiated. The remaining balance gets renewed under new terms. Most Canadians renew three to five times before they own their home outright.

What happens in the 120-day window

Canadian lenders are required to notify you of an upcoming renewal. Most send a notice 120 to 150 days before the maturity date, with a proposed rate and term already filled in.

That’s not an invoice — it’s an opening offer. You are not obligated to accept it.

During this window you can:

  • Negotiate with your existing lender. They won’t always advertise their best rate. Asking directly — and mentioning you’re comparing alternatives — often produces a lower rate than the envelope offer.
  • Shop competing lenders. Credit unions, monoline lenders, and mortgage brokers often have rates below what the big banks post. Switching lenders at renewal does not require requalifying under the OSFI stress test if your amortization hasn’t changed and your mortgage balance stays the same — a significant advantage.
  • Change your terms. You can switch from monthly to accelerated bi-weekly payments, increase your amortization (with lender approval), or choose a different term length.

If you do nothing, most lenders will automatically renew you at their posted rate — which is almost never their best rate.

Switching lenders at renewal: what you need to know

Moving to a new lender at renewal is more common than it used to be. A few things to understand:

The stress test applies if you increase your amortization or borrow more. A straight renewal at the same balance and remaining amortization is exempt. This is important — many homeowners assume they need to requalify for their full mortgage, and that’s not true in most cases.

CMHC-insured mortgages have restrictions. If your mortgage is insured (typically because you had less than 20% down), you can still switch lenders at renewal, but you generally can’t extend your amortization beyond 25 years or increase your loan amount without new CMHC premiums.

The switch process takes time. Allow 30 to 45 days. A new lender needs an appraisal (sometimes a desktop appraisal is sufficient), title insurance, and legal work. If you wait until two weeks before maturity to start, you’ll have very little leverage.

Term selection: the decision most people get wrong

Choosing a term length is the most consequential renewal decision most homeowners make, and it’s the one that gets the least analytical attention.

The conventional wisdom — “lock in long when rates are high” — is a reasonable heuristic, but it ignores the rate curve. In a normal yield curve, longer terms cost more because lenders charge a premium for rate certainty. When the yield curve is flat or inverted (as it has been for much of 2024–2026), shorter terms sometimes carry similar or even higher rates than longer ones, which changes the math entirely.

The right question isn’t “fixed or variable?” or “short or long?” — it’s: what is the total cost of each path I’m considering, and which one wins?

That means modelling the full term: payment × months, minus principal paid, equals total interest. A rate that’s 0.3% lower sounds appealing, but if it’s on a 5-year term versus a 3-year term with a lower rate, the total cost comparison might tell a different story.

What the bank’s calculator won’t show you

Bank mortgage calculators are useful for one thing: seeing your payment. They are not designed to help you compare across lenders, model prepayments, analyze different term lengths, or estimate the penalty for breaking early.

They’re also built on the assumption that you’ll renew with the same institution. The “helpful” renewal tool on your bank’s website is a retention tool, not a decision tool.

Tools like RenewalIQ exist specifically for this gap: modelling the actual options in front of you, showing total cost across scenarios, and helping you arrive at a lender conversation with your own numbers in hand.

Calculations in RenewalIQ use Canadian semi-annual compounding as required by the Interest Act (Canada), Section 6. Results are estimation-grade — confirm specifics with your lender or a licensed mortgage professional.